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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993.
Commission file number 1-4238
LORAL AEROSPACE SAVINGS PLAN
LORAL CORPORATION
600 Third Avenue
New York, New York 10016
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REQUIRED INFORMATION
The statement of net assets available for benefits as of December 31, 1993 and
1992 and the related statement of changes in net assets available for benefits
for the period January 1, 1993 to December 31, 1993, together with the Report
and Consent of Independent Accountants, are attached and filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Savings Committee has duly caused this annual report to be signed by the
undersigned thereunto duly authorized.
LORAL AEROSPACE SAVINGS PLAN
-------------------------------------
(Plan)
Date: June 24, 1994 BY: STEPHEN L. JACKSON
-------------------------------------
Stephen L. Jackson
Member of Savings Committee
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REPORT OF INDEPENDENT ACCOUNTANTS
-------------
To the Savings Committee of
Loral Aerospace Corp. and Participants
of The Loral Aerospace Savings Plan:
We have audited the accompanying statements of net assets available for
benefits of the Loral Aerospace Savings Plan ("the Plan") as of December 31,
1993 and 1992, and the related statement of changes in net assets available for
benefits for the period January 1, 1993 to December 31, 1993. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1993 and 1992, and the changes in net assets available for
benefits for the period January 1, 1993 to December 31, 1993, in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of the Plan
for (1) assets held for investment purposes at December 31, 1992, and (2)
reportable transactions for the year ended December 31, 1993, are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The Fund Information in
the statement of net assets available for benefits and the statement of changes
in net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for plan benefits and
changes in net assets available for plan benefits for each fund.
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The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ COOPERS & LYBRAND
- - ---------------------
Sherman Oaks, California
June 21, 1994
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LORAL AEROSPACE SAVINGS PLAN
Statement Of Net Assets Available for Benefits
At December 31, 1993
(in thousands)
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------------
Loral Stock Ford Stock Common Stock Current Interest Income
Fund Fund Fund Fund Fund Total
----------- ---------- ------------ ---------------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value
(Notes 1, 2, and 4) $112,123 $213,758 $101,725 $56,224 $114,245 $598,075
Cash Equivalents (Note 1) 394 5 6,534 552 7,485
Accrued investment income 3 6 156 2 167
Loans receivable from
participants (Note 6) 18,318 18,318
Other receivables (2) (25) 7 (845) 696 (169)
Interfund receivable (payable) 2,501 (1,709) 436 (2,750) 1,522
---------------------------------------------------------------------------------------
Total assets 115,019 212,035 102,168 77,637 117,017 623,876
Liabilities:
Other liabilities (607) (634) (3,052) (4,293)
---------------------------------------------------------------------------------------
Net assets available for
benefits $114,412 $211,401 $102,168 $74,585 $117,017 $619,583
=======================================================================================
</TABLE>
See notes to financial statements.
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LORAL AEROSPACE SAVINGS PLAN
Statement Of Net Assets Available for Benefits
At December 31, 1992
(in thousands)
<TABLE>
<CAPTION>
Fund Information
---------------------------------------------------------------------------
Loral Stock Ford Stock Common Stock Current Interest Income
Fund Fund Fund Fund Fund Total
----------- ---------- ------------ ---------------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments, at fair value
(Notes 2 and 4) $51,845 $169,215 $83,055 $54,824 $104,335 $463,274
Cash Equivalents (Note 1) 1 1,661 5,216 23 6,901
Accrued investment income 1 5 171 177
Loans receivable from
participants (Note 6) 15,981 15,981
Other receivables 3 8 1 38 682 732
Interfund receivable (payable) 1,663 (460) 1,606 (4,176) 1,367
---------------------------------------------------------------------------------------
Total assets 53,512 168,764 86,328 72,054 106,407 487,065
Liabilities:
Other liabilities (164) (398) (5) (1,847) (2,414)
---------------------------------------------------------------------------------------
Net assets available for
benefits $53,348 $168,366 $86,323 $70,207 $106,407 $484,651
=======================================================================================
</TABLE>
See notes to financial statements.
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LORAL AEROSPACE SAVINGS PLAN
Statement Of Changes In Net Assets Available for Benefits
For The Period January 1, 1993 to December 31, 1993
(in thousands)
<TABLE>
<CAPTION>
Fund Information
----------------------------------------------------------------------------
Loral Stock Ford Stock Common Stock Current Interest Income
Fund Fund Fund Fund Fund Total
----------- ---------- ------------ ---------------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions (Note 3):
Employer's $12,636 $ 12,636
Participants' 10,139 $12,381 $ 3,975 $ 8,307 34,802
Investment income
(Notes 2, 4, 6):
Dividend income 1,378 $ 5,824 7,202
Interest income 2,789 8,217 11,006
Net appreciation in fair value
of investments 39,140 77,861 9,297 126,298
---------------------------------------------------------------------------------------
63,293 83,685 21,678 6,764 16,524 191,944
Withdrawals (5,859) (23,167) (8,593) (8,196) (11,197) (57,012)
Transfer among funds, net 3,630 (17,483) 2,760 5,810 5,283
---------------------------------------------------------------------------------------
Net increase 61,064 43,035 15,845 4,378 10,610 134,932
Net assets available for
benefits at January 1, 1993 53,348 168,366 86,323 70,207 106,407 484,651
---------------------------------------------------------------------------------------
Net assets available for
benefits at December 31, 1993 $114,412 $211,401 $102,168 $74,585 $117,017 $619,583
======================================================================================
</TABLE>
See notes to financial statements
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LORAL AEROSPACE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
1. Plan Description
The Loral Aerospace Savings Plan (the "Plan") was established by
Loral Aerospace Corporation ("LAC" or the "Corporation") effective
January 1, 1991. LAC, a wholly-owned subsidiary of Loral Aerospace
Holdings, Inc. ("LAH"), is the Plan sponsor. LAC and Space
Systems/Loral ("SS/L"), a majority-owned subsidiary of LAH, and any
of their affiliated companies are the "Participating Employers."
LAH is a wholly-owned subsidiary of Loral Corporation ("Loral").
The Plan is a defined contribution plan designed to provide eligible
employees with systematic savings and tax-advantaged long-term
savings for retirement. Participants are able to direct their
investment to a combination of four funds: the Loral Stock Fund;
the Common Stock Fund; the Income Fund; and the Current Interest
Fund. A fifth fund, the Ford Stock Fund, is a carry-over fund
resulting from the transfer of assets from a prior plan;
contributions and reinvestment of dividends into that fund are not
permitted. The Employer Contribution in the form of Loral
Corporation Common Stock ("Loral Stock") is invested in the Loral
Stock Fund and is purchased in accordance with the Plan document.
Pending investment in the various funds, the Trustee may temporarily
invest part of the contributions in temporary cash investments
earning interest at money market rates.
Generally, each employee of a Participating Employer is eligible to
participate in the Plan on the first day of the month following the
date of employment.
A complete description of the Plan including eligibility
requirements and vesting provisions are contained in the Plan
document.
2. Summary of Significant Accounting Policies
Valuation of Investments
Investments in the Loral Stock Fund and the Ford Stock Fund are
valued at the last reported sales price on the last business day of
the year.
Investments in the Common Stock Fund are valued at the net asset
value per share as reported by the fund manager. Investments in the
Income Fund are valued at contract value (representing contributions
made under the contract plus accumulated interest at the contract
rate) earning interest at the contract rate. The Current Interest
Fund is valued at cost which approximates fair value; the interest
rate is variable.
The Plan presents in the statement of changes in net assets
available for benefits the net appreciation or depreciation in the
fair value of its investments which consists of realized gains or
losses and the unrealized appreciation or depreciation on those
investments.
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LORAL AEROSPACE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Investment Transactions and Investment Income
Investment transactions are accounted for on a trade date basis.
Dividend income is recorded on the ex-dividend date. Interest
income is accrued as earned.
Withdrawals Payable
Withdrawal claims pertaining to 1993 and 1992 which were paid in
1994 and 1993, were approximately $3,789,000 and $1,819,000
respectively. These payments are reported as a liability on Form
5500.
Forfeitures
Generally, participants vest 100% in the Employer Contribution after
completion of five years of service and, thereafter, vest
immediately in all future Employer Contributions. Non-vested
Employer Contributions are forfeited upon termination or withdrawal.
These amounts are used for certain Plan administrative expenses or
to reduce future Employer Contributions. Forfeitures for the year
ended December 31, 1993 were $641,230.
Reclassifications
Certain reclassifications have been made to conform prior years
amounts to the current year presentation.
3. Contributions
The Plan has both a Tax-Efficient Savings ("TES") and a Regular
Savings feature. Under the Plan, and subject to limits imposed by
the Internal Revenue Code ("IRC"), participants may elect a
reduction in eligible salary up to 15% with a corresponding TES
contribution in the same amount made to the Plan by the Corporation
on their behalf. Such contributions are excluded from the
participant's taxable income. Subject to limits imposed by the IRC,
participants may also contribute up to 10% of their base salaries to
the Regular Savings feature of the Plan on an after-tax basis.
Participants vest immediately in their TES and Regular Savings
contributions.
Participants' contributions are matched at a rate of $.60 for each
dollar of TES and/or Regular Savings contributions, up to 6% of
participants' base salaries, unless a Participating Employer
determines to make a lesser contribution or no contribution.
As of December 31, 1993, there were approximately 12,000
participants in the Plan, some of whom have elected to invest in
more than one fund.
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LORAL AEROSPACE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
Although the Participating Employers have not expressed an intent to
do so, the Participating Employers can discontinue their
contributions at any time. The Corporation can terminate the Plan
at any time subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). In the event of a
discontinuance and/or termination of the Plan, participants will
become 100 percent vested and the net assets of the Plan will be
allocated among the participants and their beneficiaries in
accordance with the provisions of ERISA.
4. Investments
Plan investments at December 31, 1993 were as follows:
<TABLE>
<CAPTION>
Face Amount Fair
or Shares/Units Value Cost
--------------- ----- ----
(in thousands) (in thousands)
<S> <C> <C> <C>
Loral Stock Fund:
Loral Corporation Common Stock 2,980,859 $112,123* $ 63,484
Common Stock Fund:
Comerica Mediumcap Index Fund 107,661 13,737 11,054
Comerica 500 Index Fund 483,097 87,988* 66,504
Income Fund:
Insurance Contracts:
John Hancock Mutual Life
Insurance Company 6.07%,
maturing December 31, 1993 31,488,000 31,488* 31,488
Protective Life Insurance
Company 8.80%, maturing
December 31, 1994 38,073,000 38,073* 38,073
Prudential Asset Management
Group 7.02%, maturing
December 31, 1995 44,684,000 44,684* 44,684
Current Interest Fund:
Comerica Short-Term Investment
Fund 56,224,000 56,224* 56,224
Ford Stock Fund:
Ford Motor Company Common Stock 3,314,081 213,758* 74,120
--------- --------
Total $598,075 $385,631
========= ========
</TABLE>
*Represents greater than 5% of net assets available for benefits.
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LORAL AEROSPACE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
5. Withdrawals
Upon termination, participants receive the vested portion of their
account balance as soon as practicable after termination.
Terminated participants who have an account balance in excess of
$3,500 may elect to leave their account balance in the Plan and
withdraw it at any time up to age 65.
Generally, a 10% penalty will be imposed on certain withdrawals of
pre-tax assets made before the participant reaches age 59 1/2.
Tax-efficient Savings Assets ("TES")
Assets in a participant's TES account may be withdrawn only for
financial hardship before termination of employment or before
reaching age 59 1/2. Financial hardship is determined pursuant to
provisions of the IRC. After age 59 1/2, TES assets may be
withdrawn in total or in part at any time.
Regular Savings Assets
Assets in a participant's Regular Savings account may be withdrawn
in total or in part at any time in accordance with the Plan
provisions.
Employer Contributions
If vested, withdrawal of assets in participants' Employer
Contribution accounts is available at the end of the two-year period
following the year in which the Employer Contributions were made.
6. Loans
The Plan permits active participants to borrow from assets in their
TES accounts that are not invested in the Income Fund. The minimum
loan amount is $1,000. The maximum loan permitted is the lesser of:
(1) $50,000 minus the highest outstanding loan balance during the
last twelve months, or (2) 50% of the vested account balance, or (3)
the assets in the TES Account which are eligible for a loan. The
amounts in (2) and (3) are reduced by any loan balance outstanding.
Participants may receive one loan per year and can have up to four
loans outstanding at any time. The interest rate for the loan is
the prime rate as defined in the Plan document. This interest rate
will remain the same for the term of the loan.
The term of a loan can be up to five years except for loans to
purchase a primary residence, which can have a term of 10 years.
Loan repayment is made through payroll deductions. Repayment of the
entire balance is permitted at any time. All loan repayments are
made to the Current Interest Fund.
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LORAL AEROSPACE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
(continued)
7. Tax Status
The Corporation will seek a determination from the Internal Revenue
Service that the Plan is a qualified plan under section 401(a) of
the IRC and is, therefore, exempt from Federal income taxes under
section 501(a). The sponsor believes the Plan is a qualified plan
under the above noted sections.
Based upon present applicable laws and regulations, participants
will not be subject to Federal income tax on the TES contributions
or Employer Contributions made on their behalf or on the earnings
credited to their account until such time as they are withdrawn.
8. Administrative Expenses
Effective January 1, 1992, most administrative expenses are paid by
the participants. The Plan permits the Participating Employers to
use forfeitures from participants' accounts to pay the asset-based
fees for the Guarantee Income Fund Contracts which were in place
prior to January 1, 1992, the Ford Stock Fund, and the Loral Stock
Fund and, to the extent not used to pay such expenses, to reduce the
Employer Contributions.
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LORAL AEROSPACE SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1993
<TABLE>
<CAPTION>
FACE AMOUNT
OR FAIR
DESCRIPTION SHARES/UNITS VALUE COST
- - ----------- ------------ ----- ----
(in thousands) (in thousands)
<S> <C> <C> <C>
Loral Stock Fund:
Loral Corporation Common Stock 2,980,859 $112,123 $ 63,484
Common Stock Fund:
Comerica Medium Cap Index Fund 107,661 13,737 11,054
Comerica 500 Index Fund 483,097 87,988 66,504
Income Fund:
Insurance Contracts:
John Hancock Mutual Life
Insurance Company 6.07%,
maturing December 31, 1993 31,488,000 31,488 31,488
Protective Life Insurance
Company 8.80%, maturing
December 31, 1994 38,073,000 38,073 38,073
Prudential Asset Management
Group 7.02%, maturing
December 31, 1995 44,684,000 44,684 44,684
Current Interest Fund:
Comerica Short-Term Inv. Fund 56,224,000 56,224 56,224
Ford Stock Fund:
Ford Motor Company Common Stock 3,314,081 213,758 74,120
Participant Loans Bearing
Interest at Rates Ranging
From 5% to 11% 18,318,000 18,318
----------- ----------
TOTAL $616,393 $385,631
=========== ==========
</TABLE>
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LORAL AEROSPACE SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(in thousands)
<TABLE>
<CAPTION>
Gain
Purchase Selling Cost of (Loss)
Price Price Asset on Sale
-------- ------- ------- -------
<S> <C> <C> <C>
Description
- - -----------
John Hancock Mutual Life Ins. Co. 43,096 43,096
GIC 6.07% - 12/31/93
Comerica Bank Short-Term Fund 187,959 187,959
Comerica Bank Short-Term Fund 201,070
</TABLE>
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CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Loral Aerospace Corporation on Form S-8 (File No. 33- 37829) of our report
dated June 21, 1994 on our audits of the financial statements of Loral
Aerospace Savings Plan as of December 31, 1993 and 1992 and for the period
January 1, 1993 to December 31, 1993, which report is included in this Annual
Report on Form 11-K.
/s/ COOPERS & LYBRAND
- - ---------------------
Sherman Oaks, California
June 24, 1994
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